Correlation Between First Hawaiian and OPKO HEALTH

Can any of the company-specific risk be diversified away by investing in both First Hawaiian and OPKO HEALTH at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining First Hawaiian and OPKO HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Hawaiian and OPKO HEALTH, you can compare the effects of market volatilities on First Hawaiian and OPKO HEALTH and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in First Hawaiian with a short position of OPKO HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Hawaiian and OPKO HEALTH.

Diversification Opportunities for First Hawaiian and OPKO HEALTH

0.87

Correlation Coefficient

First Hawaiian  OPKO HEALTH

Very poor diversification

The 3 months correlation between First and OPKO is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding First Hawaiian and OPKO HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPKO HEALTH and First Hawaiian is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on First Hawaiian are associated (or correlated) with OPKO HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPKO HEALTH has no effect on the direction of First Hawaiian i.e., First Hawaiian and OPKO HEALTH go up and down completely randomly.

Pair Corralation between First Hawaiian and OPKO HEALTH

Assuming the 90 days horizon First Hawaiian is expected to under-perform the OPKO HEALTH. In addition to that, First Hawaiian is 1.48 times more volatile than OPKO HEALTH. It trades about -0.26 of its total potential returns per unit of risk. OPKO HEALTH is currently generating about -0.33 per unit of volatility. If you would invest  150.00  in OPKO HEALTH on October 9, 2024 and sell it today you would lose (8.00) from holding OPKO HEALTH or give up 5.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

First Hawaiian  vs.  OPKO HEALTH

First Hawaiian

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Hawaiian are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, First Hawaiian reported solid returns over the last few months and may actually be approaching a breakup point.

OPKO HEALTH

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in OPKO HEALTH are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, OPKO HEALTH is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with First Hawaiian and OPKO HEALTH

The main advantage of trading using opposite First Hawaiian and OPKO HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Hawaiian position performs unexpectedly, OPKO HEALTH can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in OPKO HEALTH will offset losses from the drop in OPKO HEALTH's long position.

The idea behind First Hawaiian and OPKO HEALTH pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.